Why is Tesla Keeping Quiet on Buffalo?

Buffalo Factory starts Production in NY

The world class solar manufacturing hub recently started production in New York. Yes, we are talking about the Tesla’s Buffalo solar factory. The idea of this huge solar factory was conceived three years ago, and much has changed in the industry since then especially in terms of prices. Though the solar factory is trying to adapt itself to the changes, it already makes much less economic sense. In our view, SolarCity has wasted millions of dollars in building up a solar panel manufacturing plant as solar panel prices have crashed the world over due to super low Chinese manufacturing costs. Though some of it might change with the USA imposing anti-dumping duties on Chinese solar imports.

With Tesla now owning SolarCity, it brought in Panasonic as a technology partner in the Buffalo factory which provided not only the technical expertise but also the much needed financial support.

About the Buffalo factory

Originally planned to use the Silevo manufacturing technology, the factory will now use Panasonic as its technology provider. The factory will now manufacture Solar Roof Tiles, in addition to making standard PV modules. Note this technology has been around for a long while but has failed due to high costs and low efficiency. Moreover, Panasonic will not be making the solar cells, instead, it will import them from its factories in Japan. The Buffalo factory has a target of producing modules at an annual rate of more than 200 MW by October and also aims to touch efficiency levels of 25%.

Why Tesla teamed up with Panasonic in Buffalo

Though Tesla acted smart by roping in Panasonic as its partner in the Buffalo factory (which also saved Tesla $250 million and shareholder fury), it is now the key customer for the solar cells and modules produced by Panasonic in Buffalo. Tesla CEO Elon Musk has recently indicated that it will go light on the Buffalo factory for the next few months. Tesla’s promised job creation and investment commitments to secure the $750 million subsidies for the Buffalo plant are yet to embody, as the company is mute on those targets.

We at Greenworldinvestor have criticized Tesla buying SolarCity for the simple reason that SolarCity’s business model did not make much sense then. Solar is becoming more mainstream by each passing day and people do not need companies to get the financing and education. Tesla bought SolarCity because owner Elon Musk owned shares in the failing company. Natural gas prices have also come down to a great extent in the USA. Solar roof tiles are also yet to gain traction in the market. All these pose significant headwinds for Tesla.

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in